Rational in Buying - Case Study Example

Rational in Buying 0 Introduction Branding is all about creating differences. Brands identify the source or marker of a product and allow consumers to assign responsibility to that particular manufacturer or service. The four steps to a strong brand are: 1. Create brand identity. 2. Establish brand meaning. 3. Develop the correct customer response. 4. Most importantly, create an intense, active loyalty relationship with customers. This is called brand relationship. A brand is judged by its salience, performance, imagery, judgment, and resonance. Advertising companies through their dedicated and professional work develops a brand. To understand the rationale in buying within the various demographics (the focus of this study will be on those in the 12-18, 30-45 and over 55 aged groups), this paper first takes a look at the role of brands and its position within the 4Ps of marketing, before evaluating its influence on the various demographics. The 4 Ps of marketing refer to Product, Place, Promotion, and Price. Each of these elements plays an important role in the success of a brand and has direct influence on the demographics mentioned herein. What is the concept of brand personality? No product or company can survive competition or sustain its identity without asserting itself on two basic components in marketing: Image, and people. If not managed properly, these components can break a brand. Brands and people have to be owned, nurtured and developed by an organisation. They are the ultimate differentiators and value creators. Companies such as Pepsi, Coca cola, Levis, and Cadburys are examples of well managed brand companies. So powerful is a brand, that unless harnessed properly, sustainability, popularity, and growth of the product can be at stake. Elements that affect an individual's relationship with a brand are: Relationship between the product and the customer, and the personality the brand associates itself with. The consumer obviously would like the personality traits to be that of his own. Characteristics that brands would like to associate with are a sense of dependability, understanding, and caring; a friend who is always there to care, respect, comfort, and enjoy (Brand Personality-The relationship Basis Model, groups.haas.berkeley.edu). It was thought that companies were responsible was the creation of a brand, or its managers and planners, but the reality is far from these. Brands are created by ordinary people like us. It is the extent to which it makes sense and the role it plays in a consumer’s life that builds a brand. There are two questions which should be asked: How different are these brands, and how relevant is it to us, as consumers? A product becomes a brand not when it talks about itself, but when people talk about it. Every single thing that one does builds a brand. 2.0 Executive Summary The three key elements of demographic segmentation variables are age, gender and the life cycle. Age is an important demographic variable in brand development and sales, as purchases vary from one demographic to another. Those in the age group of 12-18 would have a different view of a product than those in the 30-45 age brackets. This can change again with those 50 and above. So, how do marketers identify the needs of these age groups, and what are the parameters by which they can gauge the right demographic for expanding their market and brand? Today, most consumers are aware of his/her rights and are well informed. Television, newspapers and magazines have only contributed to their better understanding of the world around them. Internet has gone a step ahead in educating and promoting awareness at the click of a button. So knowledgeable is today’s consumer that it becomes difficult for manufacturers and producers to associate themselves with them. However, there are certain influences that demarcate these demographics, the 4Ps of marketing namely, product, place, promotion, and price. These elements have a direct impact on a consumer’s buying rationale. In order to understand the topic on a consumer’s buying rationale on the three demographics, this paper explores the importance of branding, and the role of the 4Ps in influencing the buying behaviour.. Three age groups are considered for this analysis; 12-18, 30-45 and those over 55. The primary objective of this paper will be to research the factors that contribute to consumer buying rationale, and then focus on the effect of this on those in the 12-18 ages demographic. 3.0 Branding and the 4Ps of Marketing Branding is an integral part of marketing. Consumers rely on information to judge a product before buying it. A consumer would weigh the options available to suit his/her need. This is what branding does. Branding is a process employed by manufacturers to convince their customers that their product is about the only thing that provides a solution to their need. The objective of branding is to convey a clear message, ensure credibility, identify with the consumer, motivate the buyer, and develop a strong bond or product loyalty. For this, it is imperative that the company knows the needs and wants of its customers (Lake.L, Lesson 1 in the Developing your Brand's Strategy Course, What is Branding and How Important is it to Your Marketing Strategy? marketing.about.com). So, how do we define branding? Branding is the process by which both a brand and brand identity are developed. Brand stands for name, and brand identity for uniqueness. It is these traits that appeals to the consumer (Definition of Branding on the web, www.wompro.com). Customers have different tastes and not all have the same loyalty for a particular brand. The same is the case with demographics. A brand that may be popular to one segment of demographic need not necessarily be a favourite of another. When such a situation arises, market planners need to work overtime to identify their product to a particular segment of demographic and plan their strategy. This is where 4Ps of marketing come in. Product, product promotion, placing of the product, and pricing of the product are an intrinsic part of marketing. Brand alone will not help sell products, they need to be positioned and priced properly to attract greater market segment. The 4Ps of Marketing The 4 Ps of marketing are in more than one way interdependent. They together help customers in making purchase decisions. If planned properly, 4Ps can also help companies identify the right segment of customers. Consumer buying behaviour is dependent on the following factors: Culture influences: Influenced by parents, brothers, sisters and other family members, they are taught what is wrong or right. Personal References: Friends or people they look up to may influence their choices of purchasing a particular product or service Economical background: Do they have a secure job and a regular income to spend on goods? Marketing and Advertising: Product awareness and branding. Social Status: Can have deep impact on buying behaviour. Parents can influence their children; professionals will have their own opinion. (Factors influencing the behaviour of buyers, Learn Marketing.com, www.learnmarketing.net) In order overcome these factors and attract consumers, marketing gurus employ the 4Ps of marketing. This not only helps companies develop a brand and instigate consumer buying behaviour, it also helps companies identify their target audience. Cultural and social influences have a negative effect on the 12-18 demographic groups. Economically too, these youngsters are dependent. They have a strong understanding of the product and brands, yet their ability to take independent decisions is truncated. However, those in the 30-45 ages demographic are more independent and can pursue their personal preferences. They are economically, socially, and culturally independent. They can thus be targeted by companies easily. The only problem with this segment is that they are not brand loyal and not easily attracted by brand. Those in the 55 and above demographic are active buyers. Necessity is their forte. In the face of this revelation, market pundits find the young 12-18 demographic to be their valued targeted customers. They are brand loyal. Thus 4Ps have a broader meaning in branding and consumer buying behaviour. A product must satisfy a consumer’s need. It comes with a cost. Production costs must be kept in check and at the same time quality should not be compromised on. A brand must keep its consumer’s interest in mind always. Price is next. Price escalation takes place when a product moves through the distribution channel.  A manufacturer's selling price becomes a distributor's cost price. This hurts dealers who end up paying more to the distributor. Ultimately, this affects competition and sales. This escalation in prices forces many consumers to look elsewhere. There are many strategies employed by companies to beat competition. There are some who find it hard to offer at reduced price because of brand. There are others who reduce their price in the face of stiff competition. Then there are those who, while retaining their image, launch products that are branded but service a different segment of demographic. Thus, price plays an important role in a consumer’s buying behaviour. Place can also determine price. Factors like who the final consumer will be and what he or she looks for must be considered. Where does a consumer look when shopping? Having an automobile showroom far from the city may not be the ideal location. It could involve additional transportation costs leading to more price escalation. Is it well connected and accessible or will additional expenses accrue in moving the products to this place? Distribution is affected. Time and money is lost. These are questions that must be addressed to control cost escalation and service customers properly. Promotion relates to publicity. Promotion can take many forms: advertising in various media, events, press releases, trade shows, brochures, flyers, internet and so on. This is where a company focuses on projecting itself and its product. Promotion creates awareness, the first step to sales. Thus, branding and 4Ps play a vital role in consumer buying rationale. This paper focuses on Levis for its research on consumer buying rationale. Levis was selected for the research as its products serve all demographics in 12-18 age group, 30-45 age group, and those above 55. The outcome of the research reflects the influence of branding and 4ps on the various groups (Volker.M, Marketing & 4Ps of Marketing, www.sfu.ca). 4.0 The Company Sal Herman, the creator of Sloops™ Blue Jeans, would never have imagined that his denim jeans would take the world by storm. The most popular brand the world over denim caters to both the young and old since the 1960's. "Denim is one of the world's oldest fabrics, yet it remains eternally young" declared an American fashion magazine. Denim's popularity was on the rise. It was stronger and more expensive than jean, and though the two fabrics were very similar in many ways, they did have one major difference: denim was made of one colored thread and one white thread; jean was woven of two threads of the same color. Levi Strauss came to San Francisco to open a branch of his brothers' New York dry goods business. He spent time learning the fabric trade in New York before launching his own business that spelt success and made a name for himself. This even instigated people to consider him to be the founder of today's blue jeans, an acknowledgement that is well appreciated by millions of people the world over. Jacob Davis a regular customer of Levi’s, used to bolts of cloth from the wholesale house of Levi Strauss & Co. He introduced metal rivets at the point of strains and looked to Levi Strauss as a business partner for this unique design. Levi, an astute businessman, saw the potential for this new product and agreed to Jacob's proposal. On May 20, 1873, the two men received patent #139,121 from the U.S. Patent and Trademark Office. Although denim pants had been around at work, worn for many years, it was the first use of rivets that created today’s jeans. Jeans began to appear in western cowboy movies and this inculcated more interest in the wear. James Dean and Fonz can be credited for bringing the casuals into fashion for teenagers in the 60's. Jacob Davis took charge of manufacturing when Levi Strauss & Co. opened its two factories in San Francisco. The denim for the riveted pants was brought from Amoskeag Mill in Manchester, New Hampshire. Durability was the magic word. People began to accept the denim jeans in a big way and began sporting them to work. Sometime in the 1890s, these pants were so popular that they were assigned the serial number 501 by Levi Strauss & Co, a number that exists to this day. Levi Strauss & Co. was the only company allowed to make riveted clothing (jean pants and jackets) until the patent went into the public domain around 1891. With the expiry of the patent, began a revolution that saw many garment manufacturers imitating the riveted clothing made by Levi Strauss & Co. Sloops™ Jeans have these same pocket seam rivets and are a direct descendant of the original pair made in 1873. Thanks to Levi Strauss and Jacob Davis, the blue jean has become a household name today (History of the Blue Jeans, The history behind Sloops Blue denim jeans started in the 17th Century, www.sloops.com). 5.0 Analysis Based on the Marketing Research figure No.1 in Appendix of ‘Investigation into different age demographics and rational in the buying behaviour’, Levis is an apparel company that launched their successful ‘Levis’ brand of jeans in the United States in the early 1890s. The jeans have been popular wear with all, especially in age groups of 12-18 and 30-45. There are those die-hards who still swear their loyalty to Levis. It was stronger and more expensive than most other jean. There were two fabrics that were used to make these apparels. Denim was made of one colored thread and one white thread; jean was woven of two threads of the same color. Levis chose to wed the two fabric’s milling techniques and used the best grade cotton, of which one thread was dyed indigo blue and the other white. This technique is synonymous of today’s jeans. What was it that made Levis a success with all age groups? How and why was Levis accepted without a fight? The success of Levis can be attributed to three distinct features: 1. Colour 2. Reliability 3. Style While blue is the hallmark of all jeans, Levis had used a mixture of indigo blue and laced it with white. This gave their product distinct uniqueness. The combination was an instant hit. People of all ages could relate their style and work by wearing this. School and college goers found jeans most suited to their lifestyle, rugged and carefree. The blue colour gave the students unlimited scope to innovate with other colour shirts and tops. Black, brown, green, white, orange, red, and yellow tops and T-shirts went well with the jeans. The rugged look also appealed to their senses. Thus, Levis had the measure of the youth with their branded product. Levi’s had created a brand image that reflected the youth. A Levis jean was known for its reliability. The jeans were made of very strong fabric that could resist pressure and strong wash. This appealed to the other age group of 30-45 office goers. Many people found that they could ill afford to work under trying conditions in ordinary pants. Many were faced with the prospect of working under severe physical condition and most wear restricted their movement. Also the fact that many had to be content with limited resources also made it impossible to fill their wardrobe. Thus, they found that Levis suited their demand and position and were immediately attracted to it. Thus, Levis could break into two age groups with their business acumen. A consumer’s buying behaviour is as intrinsic as a jigsaw puzzle. There are a lot of internal and external factors that propagate an individual’s thought. It could be either an individual thought or it could be a result of their immediate surroundings. Consumers are aware of their need and will analyse a product before deciding on what to buy, where to buy, when and how to buy. In general, consumers look for quality, price, and other benefits before deciding on it. These are internal factors that consumers are knowledgeable of. External factors are decisions that are enforced on consumers. Brand plays an important part in a consumer’s buying pattern. Most consumers are strongly affected by brand imagery and quality of the product. To cater to the 12-18 aged consumers, Levi’s had to understand the rationale in their buying behaviours. It took them some time to understand the reason for their business decline. Levi’s had to deviate from their time-tested marketing strategies. What is brand equity? To understand the brand equity, the following pyramid shows how advertisers develop a brand. Brand Pyramid Brand Resonance Most reliable. Brand judgement/Feelings an attractive and comfortable piece of fabric woven to perfection. Brand Performance/Imagery A Quality product. Reassuringly Expensive Brand Salience Best jeans for your money. To achieve a Brand Resonance is the dream of all companies. Levis has grown from strength to strength over the years. Today, the jean is worn as a formal wear as well. This only goes to say that people have accepted Levis as a truly multifunctional product. Levi’s made adjustments to capture the younger generation by introducing a range of lower priced products to supplement the premium range because the premium market was definitely smaller in terms of size. This had to be done to sustain their presence in all the sectors. In America, Levi’s answer to expanding customer base and strengthening brand loyalty was to create an entirely new business within Levi Strauss & Co that would build on the proven Levi heritage and address an unidentified market. They began by directing their premium jeans in value channels like Target and Wal-Mart. The 150-year-old Levi Strauss & Co. was losing ground because of a weakening product and poor customer knowledge. The company was losing ground due to market lapses. They were not paying attention to customer needs. A brand needs to understand the consumer needs. No individual is alike, but to enjoy a better market share, the company needed to study the buying rationale of its customers. From adolescents to the middle aged, these were the people Levi’s was targeting. They had to plan a strategy to bring back their customers. New brands came along with sexier fits and better fabrics. This was done after they conducted surveys with these age groups to figure out the size of the existing market, their fit, styles and prices that would improve their share without hurting their parent brand. “We had a different product and a different archetype,” said Scott LaPorta, President and General Manager of US Levi Strauss Signature Brand. He is of the strong belief that the new Levis Strauss Signature jeans stood for strong family values; high quality at affordable price, while the older brand represented individuality and adventure ( Farah, CMO, The Resource for Marketing Executives, How the LPGA and Levi Strauss Signature Brands Built Customer Loyalty and New Brands, www.cmomagazine.com). The Image of a Brand, in the eyes of the consumer, may also act as a so called filter or perception of ‘good or bad’ products. This is easily influenced by marketing variables and/or other social influences over which the commercial marketer has limited control. Premium Branding has enabled producers to establish consumer loyalty, increase consumer and customer awareness and develop and establish extensions of the brand. This makes branding a paramount element of Marketing Strategy, although it was always demanding ‘a great deal of long-term investment, especially for advertising, promotion and packaging’ (Phillip Cotter 2003). 5a. Marketing What is marketing and how does marketing sustain the awareness of a brand? Can advertising agencies give a brand the impetus to grow and be a part of a household? Ask an O&M executive and his immediate response would be yes. Companies are all the time competing with others for space, and to have that cutting edge in the market seek the guidance of professionals who can change the complex of a product by ‘spicing it’ up. The consumer of today is well educated and knowledgeable. They expect and seek quality. So, do brands really sell by themselves? We come across numerous advertisements endorsed by celebrities. Celebrities like Tiger Woods, Maria Sharapova, David Beckham, and even Ronald Reagan to name a few, endorsed products to create a brand. What marketing gurus need to look at is the services that the company can offer its customers and at what price. We have seen that the needs of those in the age demographics of 12-18 and 30-45 are different. So, what is it that will sell and attract these groups? With competition getting bigger, companies are forced to seek new avenues to fight to sustain their image and product in the market. What do advertising agencies offer these companies to enhance their share of the market? Most advertising companies provide all or most of the services like PR, Strategic marketing, Media support, Client servicing, Creative writing, Account planning and Event Management. Public Relations relates to image makers. Advertising agencies offer constant monitoring of competitive advertisements and provide the much needed insights into market trends. 5b. Branding Branding is all about creating differences. When a product is given a name, logo, or a symbol it is said to be branded. Brands identify the source or marker of a product and allow consumers to assign responsibility to that particular manufacturer or service. A brand is judged by its salience, performance, imagery, judgment, feeling and finally resonance. Whether the brand ultimately became the number one is debatable. How does a product sustain itself? Simple! Get customers to buy the product over and over again. Is it that simple to have consumers buying the same product over a period of time, despite new products coming into the market? Definitely not! Levi’s shot to the top for a while before losing ground. Becoming the number one is one thing and sustaining that position is another. The fact is that every brand in every position, whether a number one or a number seven, needs to keep running at the same pace as the other, to remain where it is. No brand becomes a number one overnight unless, of course, it is like Milkmaid, which was a first of its kind in concept. All brands start at positions that are far below in the pecking hierarchy of brands in their respective category. Slowly, but steadily, through relevant inputs of the branding kind, brands raise higher and higher in their category stakes. What consumers look for is reliability and the assurance of a brand. For a brand to be considered number one, it should have high brand equity and high sales volume. It is these factors that determine the confidence in a consumer. It is nice to select number one brands. It should be done in a systematic fashion with inputs from consumers because brands are made for them. This is what advertising agencies strive to deliver for their clients. Every advertising agency strives to attain this goal for their clients. 5c. Retail Modern retail is supposed to be complicated business. And we are not just talking about managing a supply chain involving hundreds of suppliers or managing store inventory running into thousands of SKUs (stock-keeping units). Retail is supposed to be complicated for one simple reason: One can never really tell what your customers want. That’s why giant retailers like Wal-Mart and Target spend millions of dollars running sophisticated computer systems that not just track what gets and what doesn’t get sold, but the time, place and identity of the buyer. That way, retailers get to push their stocks faster and better. The idea to good advertising and marketing is in studying consumer behaviour. Consumer behaviour is quite unpredictable at times, but on most cases, it’s just a question of getting the basics right. Advertising agencies draw up plans from time-to-time to woo consumers to these malls. Attractive gifts and discounts offered lure the middle-class strata of society. 5d. Strategy It is proven that those in the age bracket of 25-40 have more buying power than others, because of the fact that they are active earners, have relatively liberal social views, and this demographic segment of people outnumber the other age demographics. However, they are impulsive buyers with low brand loyalty. Levi's looked to tap into pop culture to move its merchandise. The move was seen necessary to attract the 12-18 age demographics. Retailers and Merchandisers teamed up to identify the music that was the perfect premium to entice their broad target market. BMG was entrusted the job to identify, confirm, and execute the program and recommend list of songs and artists specifically selected to excite the target market. The end product comprised of three discs for $1.99, with every purchase of $35 or more in Levi's merchandise. This ensured that the teens were receiving a quality product along with three good CDs. These CDs featured video enhancements, special codes allowing the experience of an online chat with Christina Aguilera (one of the artists) herself, game pieces and special links to Sears, Levi's and the artist's Web sites. According to Britton, these are the kind of extras that make promotional products span all age groups within the teen market. "These are successful because, not only is the activity fun, teens can associate it with hanging out with their friends, and if you can tie in something that is going to relate to them and their friends, it's going to hit much closer to home" he continued. It's certainly not hard to imagine a group of teens heading to Sears, not only to buy their clothes and get their CDs together, but also to head home to schedule their chat with their favorite music star together. The CD promotion was a great success for Sears and Levi's, with more than 750,000 CDs distributed over the lifespan of the program. Britton also said that concert tickets, entrances to festivals, a night on the town in a limo, were the kind of experiences teens dream of and get excited about. This does however have a legal tangle; "While teens are more tech-savvy these days, they are still not adults, and as a responsible brand, you have to raise the bar on your level of communication with younger people”. "Companies need to be clear about the real chances to win and what teens really have to do to participate, and maybe the fine print should be a little bit bigger, so to speak". Companies dealing with kids below 14 years need to deal with their parents as well. If any kind of direct marketing is involved with children below 14 years, COPPA laws states clearly that they have to get their parent’s assent to get the e-mail address. By marketing to teens a lot more can be gained. It is here that greater opportunity to build a lifetime brand loyalty among teenagers begins. It may seem easy to say but the fact that in order to keep the targeted teens loyal to the brand, strategies need to develop simultaneously. Consumer behaviour and buying trend needs to be monitored from time-to-time. Coca-Cola, according to Britton, is an example to emulate. "Coke has done a great job. That company starts with the teens, takes them all the way up to adulthood, and back to nostalgia," he says (Back to School, September 2, 2003, potentialsmag.com). 6.0 Recommendations Thus, the research on the three age demographics revealed that by employing strategies, they could sustain their operations and profits. The outcome pointed to the following points in determining consumer buying rationale. These factors directly or indirectly led to the buying rationale of those in the age groups of 12-18, 30-45, and 50 and above. These factors are: Culture and society Consumer’s personal involvement in buying, and motivation patterns The consumer’s brand perception Social background Models of consumer behaviour need to be studied Motivation 4Ps Market planners must initiate action to identify consumer needs and want. Branding is a method to induce a purchase. Meticulous planning and the use of the 4Ps will help companies overcome difficulties and help sustain business. Companies need to identify their market segment and work to build on their image. Price, place, promotions, and product, not necessarily in that order, need to be made more consumers centric. This will only help overcome competition. 7.0 Conclusion Companies can learn from the strategies adopted by Levis. Levis had from the beginning targeted the 12-18 ages demographic, and worked on bringing them into its strong consumer base. This age demographic is more brands loyal and this was a point of contention for Levis to target this segment. To win them over, Levis had to cut price and at the same time produce quality Levis brand jeans. This they did by cutting overheads, designing equally good jeans at lower costs, while at the same time maintaining their trademark brand for their more high class customers. They did away with franchise and opened their own outlets to minimise costs and made elaborate arrangements to cut into logistics. This way, Levis was able to control price escalation and maintain their loyal consumer base. 8.0 Appendix 1. History of the Blue Jeans, The history behind Sloops Blue denim jeans started in the 17th Century, www.sloops.com/history.htm 2. JTW Article - An Investigation on Affecting Factors of Teenagers www.turkishweekly.net/articles.php?id=133 3. Samar Farah, CMO, The Resource for Marketing Executives, How the LPGA and Levi Strauss Signature Brands Built Customer Loyalty and New Brands, www.cmomagazine.com/conferences/05_perspectives/lpga.html 4. Back to School, September 2, 2003, potentialsmag.com/potentials/magazine/article_display.jsp?vnu_content_id=1966473&&&imw=Y 5. Excerpts from an article by Lauterborn, the James L. Knight Professor of Advertising in the University of North Carolina, USP: the most disastrous advertising invention? 4Ps magazine. 6. Laura Lake, Lesson 1 in the Developing your Brand's Strategy Course, What is Branding and How Important is it to Your Marketing Strategy? marketing.about.com/cs/brandmktg/a/whatisbranding.htm 7. Definition of Branding on the web, www.wompro.com/catalogue/category22/product4514 8. Factors influencing the behaviour of buyers Learn Marketing.com, http://www.learnmarketing.net/consumer.htm 9. Mike Volker, Marketing & 4Ps of Marketing, www.sfu.ca/~mvolker/biz/mktintro.htm Read More